Azerbaijan in the post-oil period - outcomes, forecasts - COMMENT

Azerbaijan in the post-oil period - outcomes, forecasts - COMMENT

The post-oil period has now begun in Azerbaijan. Tendencies observed in the past 2-3 years, for example, the gradual growth of the nonoil sector in the structure of tax receipts in the state budget, expanding economic infrastructure in the region, decline in the scale of 'shadow economy', acceleration of the transparency processes and other moments show that the country's economy is entering a new stage.

First results

In January-September of this year alone the country's non-oil sector demonstrated more than a 15% growth, which can be assessed as a very high result. Serious indicators were obtained in agriculture, while economic growth reached 7%.

Let's take a look at other economic indicators. To date, Azerbaijan's foreign state debt makes just 17% of the gross domestic product, which is the 9th indicator globally. All the same, the conducted socially oriented reforms, that is the fact that inflation rate did not exceed 2.5%, despite the adoption of decisions towards raising pensions, wages and benefits to more than 4,000,000 people and allocation of billions of manats from the state budget, was possible owing not to the chaotic but programmed implementation of works towards economic diversification, raising additional investments in industry and agriculture and adoption of decisions.

The reports and statements of heads of the World Bank, European Bank for Reconstruction and Development, Asian Development Bank, International Monetary Fund and other leading international financial structures also testify to the effectivess of reforms conducted in Azerbaijan. For example, Azerbaijan is among the 20 most reformer states, according to World Bank's Doing Business report. The Davos Work Economic Forum has recently published a new report, in which the focus is laid to consistent reforms conducted in Azerbaijan.

At the consultations held on the economic outcomes of January-September 2019, President Ilham Aliyev laid a particular emphasis on these moments. The head of state noted that today the main goal is to achieve high economic indicators and continue the reforms. Stressing the availability of sufficient resources, President Ilham Aliyev said that revealing these resources, raising the budget revenues and ensuring transparency of budget spending is the main task facing the government. The head of state noted that Azerbaijan's sustainable development must be ensured solely through the non-oil sector.

New targets, new structure, new staff

During his speech at the interactive session 'Strategic vision: Eurasia' as part of the Davos World Economic Forum in January 2018, the President of Azerbaijan noted that the oil and gas projects initiated in the country will continue but the main attention will be laid on introduction of high tech, development of innovative spheres, industry and agriculture, strengthening of entrepreneurship.

Naturally, every reform is conducted by personnel. The goals set can only be achieved with the staff demonstrating new approach, fresh vision and capable of applying modern international trends. The staff reforms observed in the government in the past two years testify to serious reforms in this sphere. The application of new approaches and prevention of officials' arbitrariness in a number of cases must be the driving force of economic reforms. The head of state drew attention to these moments during the recent consultations and said that there is a strong political will, the reforms will not be sacrificed for the sake of personal interests and those who hinder the works will be distanced from the process. It means that the credibility of every official will grow depending on the real work he does.

What happens next?

And what is the main basis for development of nonoil sector? First of all, this is the fight against 'shadow' economy. The main provision for transformation of business environment is ensuring economic transparency and preventing monopoly, increasing the economic effectiveness of state enterprises. Because, as President Ilham Aliyev said, 'dragged out of shadow, business will improve Azerbaijan's economic indicators and reflect the real indicators'. All these moments, in turn, will condition the stimulation of socioeconomic development of regions, alongside the capital city, further improvement of the investment climate in the country, attraction of foreign and domestic investments in nonoil sector and, most importantly, the development of partnership in state-enterprise relations.

For example, considering the implementation of the strategic roadmap connected with the development of heavy industry and mechanical engineering and the modern processes of tasks set, as a result of implementation on a qualitatively new level, it is expected that Azerbaijan will export technical knowledge, know-how, methods of effective production and management to the neighbor countries, the gross domestic product will rise over AZN 1.5 bn, complete use of local crude base will be ensured in ferrous metallurgy and over 7,000 jobs will be created.

Meanwhile, the tasks set in agriculture, as one of other strategic spheres of the nonoil sector and one of the 'Main directions of strategic roadmap on national economy and main sectors of economy' will ensure the development of the agrarian sector and food security, and create favorable conditions for the growth in competitiveness in this sphere and development of the product processing of agriculture.

As can be seen, economic growth and nonoil sector development mean new enterprises and new jobs, while new jobs mean further increase in the purchasing ability of the population and improvement of their welfare.

As President Ilgam Aliyev said: "We want to see Azerbaijan as a modern, dynamically developing country, using transparency as a symbol of its policy, and we will achieve it."

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